We observe the breakup dynamics of an elongated cloud of condensed 85Rb atoms placed in an optical waveguide. The number of localized spatial components observed in the breakup is compared with the number of solitons predicted by a plane-wave stability analysis of the nonpolynomial nonlinear Schr{“o}dinger equation, an effective one-dimensional approximation of the Gross-Pitaevskii equation for cigar-shaped condensates. It is shown that the numbers predicted from the fastest growing sidebands are consistent with the experimental data, suggesting that modulational instability is the key underlying physical mechanism driving the breakup.